10-QPeriod: Q3 FY2018

MONOLITHIC POWER SYSTEMS INC Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 2, 2018For Securities:MPWR

Summary

Monolithic Power Systems, Inc. (MPWR) reported strong financial results for the nine months ended September 30, 2018, demonstrating robust revenue growth across most of its key end markets, with the exception of a slight decline in the consumer segment. The company achieved significant year-over-year revenue increases in computing and storage (56.0%), automotive (52.1%), and industrial (31.7%) markets. This growth, coupled with an improved gross margin of 55.5%, contributed to a substantial rise in net income. Diluted earnings per share increased from $1.22 to $1.75 year-over-year. The company also continued its focus on R&D and SG&A expenses, managing them as a percentage of revenue effectively while growing the business. MPWR's financial health appears strong, with an increase in cash and cash equivalents and a healthy working capital position. The company also reaffirmed its commitment to returning value to shareholders through increased cash dividends. Investors should note the company's continued expansion into key growth markets and its disciplined approach to operational management.

Financial Highlights

49 data points
Beta

Revenue

$159.97M

55.6% Gross Margin

Net Income

$31.57M

19.7% Net Margin

EPS (Diluted)

$0.71

Total Assets

$763.16M

Cash & Equivalents

$131.21M

Free Cash Flow

$47.09M

Financial Statements
Beta
Revenue$159.97M
Cost of Revenue$70.96M
Gross Profit$89.02M
SG&A Expenses$29.55M
Operating Expenses$55.52M
Operating Income$33.49M
Net Income$31.57M
EPS (Basic)$0.75
EPS (Diluted)$0.71
Shares Outstanding (Basic)42.36M
Shares Outstanding (Diluted)44.67M

Key Highlights

  • 1Revenue increased by 25.6% to $428.9 million for the nine months ended September 30, 2018, compared to $341.5 million for the same period in 2017.
  • 2Gross margin improved to 55.5% for the nine months ended September 30, 2018, up from 54.8% in the prior year period.
  • 3Net income for the nine months ended September 30, 2018, rose to $77.6 million, an increase from $53.1 million in the prior year period.
  • 4Diluted earnings per share for the nine months ended September 30, 2018, was $1.75, compared to $1.22 for the same period in 2017.
  • 5Cash and cash equivalents increased to $131.1 million as of September 30, 2018, from $82.8 million as of December 31, 2017.
  • 6The company increased its quarterly cash dividend from $0.20 to $0.30 per share, effective in the first quarter of 2018.
  • 7Revenue from the computing and storage market saw a significant increase of 56.0% for the nine months ended September 30, 2018.

Frequently Asked Questions

The primary driver of revenue growth was strong performance in key end markets, particularly computing and storage (up 56.0%), automotive (up 52.1%), and industrial (up 31.7%). These increases were driven by higher sales in applications like solid-state drives, cloud computing, high-performance notebooks, infotainment systems, and power source products.

Profitability saw a significant improvement. Gross margin increased to 55.5% for the nine months ended September 30, 2018, up from 54.8% in the prior year period. Net income grew substantially to $77.6 million from $53.1 million, and diluted earnings per share increased from $1.22 to $1.75.

MPWR's liquidity position remains strong. Cash and cash equivalents increased to $131.1 million as of September 30, 2018, from $82.8 million at the end of 2017. The company also maintains a healthy working capital of $471.9 million. The company anticipates that cash generated from operations, along with existing cash balances and investments, will be sufficient to meet its liquidity requirements for the next 12 months.

Yes, in February 2018, the Board of Directors approved an increase in the quarterly cash dividend from $0.20 per share to $0.30 per share, effective for dividends declared starting in the first quarter of 2018. This reflects the company's commitment to returning value to shareholders.